Correlation Between Great Southern and First Northwest
Can any of the company-specific risk be diversified away by investing in both Great Southern and First Northwest at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Great Southern and First Northwest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Southern Bancorp and First Northwest Bancorp, you can compare the effects of market volatilities on Great Southern and First Northwest and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Great Southern with a short position of First Northwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and First Northwest.
Diversification Opportunities for Great Southern and First Northwest
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Great and First is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and First Northwest Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Northwest Bancorp and Great Southern is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Great Southern Bancorp are associated (or correlated) with First Northwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Northwest Bancorp has no effect on the direction of Great Southern i.e., Great Southern and First Northwest go up and down completely randomly.
Pair Corralation between Great Southern and First Northwest
Given the investment horizon of 90 days Great Southern is expected to generate 1.26 times less return on investment than First Northwest. In addition to that, Great Southern is 1.25 times more volatile than First Northwest Bancorp. It trades about 0.08 of its total potential returns per unit of risk. First Northwest Bancorp is currently generating about 0.12 per unit of volatility. If you would invest 1,030 in First Northwest Bancorp on November 2, 2024 and sell it today you would earn a total of 34.00 from holding First Northwest Bancorp or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Southern Bancorp vs. First Northwest Bancorp
Performance |
| Timeline |
| Great Southern Bancorp |
| First Northwest Bancorp |
Great Southern and First Northwest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Southern and First Northwest
The main advantage of trading using opposite Great Southern and First Northwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern position performs unexpectedly, First Northwest can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in First Northwest will offset losses from the drop in First Northwest's long position.| Great Southern vs. First Northwest Bancorp | Great Southern vs. Community West Bancshares | Great Southern vs. First Financial Northwest | Great Southern vs. First Capital |
| First Northwest vs. Home Federal Bancorp | First Northwest vs. Magyar Bancorp | First Northwest vs. First Capital | First Northwest vs. HomeTrust Bancshares |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the CEOs Directory module to screen CEOs from public companies around the world.
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